The delivery was so brisk, the announcements rattled off at such machine gun speed, you could almost have missed the message. But once the order papers were waving and the chancellor was back in his seat, its significance began to sink in. Mr Brown has reshaped the British political landscape. He became yesterday the first chancellor of his party able to head into an election bragging about a record of extraordinary success: the lowest unemployment and inflation rates for a generation, eye-popping surpluses and a greater repayment of the national debt in one year than had been accomplished in the previous 50. Where his predecessors devoted their pre-election Budgets to crisis management, Mr Brown could boast about four years of economic stability. The once automatic association of Labour with economic incompetence is finally broken.

The second tectonic shift in what happened yesterday goes to the heart of the long-term, centre-left project for Britain, fundamentally altering the terms of trade of our politics. For decades, the debate essentially ran on Conservative lines: whoever offered the lowest tax rates could be expected to win. That made elections a "Dutch auction" on taxes, with Labour routinely outbid by the slash-and-burn Tories. Yet yesterday Mr Brown could refuse the obvious trick - a penny cut in income tax - in favour of a mix of tax breaks targeted at the poorest and around £2bn extra for public spending. In other words, he has chosen to stake Labour's electoral hopes on the belief that when voters face a choice between £8bn worth of Tory tax cuts and Labour's promise of investment in schools and hospitals, they will go for the latter. If that is right, and every sign points that way, it marks a victory not just for Labour but for the whole progressive, social democratic cause.

The mixture with which he achieved this is full of commendable things. Millions of families on low or modest incomes will get a huge boost through the complex bundle of benefits and tax credits now on the way. Pensioners, neglected before, have had a good deal and pegging the minimum income guarantee to earnings means the poorest will receive a 40% rise over the next 20 years. While much of that was predicted, one welcome surprise was an inner-city regeneration scheme that involves six tax cuts costing £1bn over five years.

But is even all this anywhere near enough? This government has to make up for decades of underinvestment, not least its own - most damagingly in its first two years in office. Even now, public spending at 39% of GDP remains below the spending levels of the Major, Thatcher, Callaghan, Wilson and Heath governments. There are still 3.2m children living in poverty, twice as many as in the last year of the last Labour government. And despite Mr Brown's carefully targeted increases in spending, inequality will continue to grow, because the poorest of the poor- unemployed, chronically sick or disabled people without children - only have benefits linked to prices, not earnings.

All this is unfinished business. Yet even this pre-electoral moment was not a time for Mr Brown's faithful old servant Prudence to be retired. Having laid the basis for substantial increases in public spending over the next few years, his macroeconomic duty now was not to overegg the pudding, whatever the temptations. Despite the widely publicised public sector surplus - £16.4 bn in the current financial year, against an original forecast of £6.5 bn - to have "given away" anything like the lion's share in this Budget would in effect have been to invite the Bank of England's monetary policy commitee (MPC) to raise interest rates sharply. This is because, as the chancellor's forecasts show, domestic demand in the economy is expected to rise at over 3% in real terms this year and gross domestic product as a whole to carry on growing at about 2.5% a year. This rate, for all the chancellor's emphasis on raising productivity, is in line with what the Treasury and Bank of England regard as sustainable without putting excessive inflationary pressure on the economy.

In this context, going ahead with targeted tax cuts of £2bn and adding £2bn. to public spending is well within the bounds of prudence. The concessions to the fuel protesters of some £1.5bn come on top of that £4bn, but are counterbalanced by lower debt interest and social security payments (the latter because of the higher level of employment). The additional growth in public sector investment over the next few years (up from 3.4% a year in real terms to 3.7%) is in any case set to turn the present surplus into a deficit before long. The projected deficits are well within the fiscal rules the chancellor has laid down (borrowing only for capital expenditure) and, even if these do not please the International Monetary Fund, they have not so far caused any obvious concern to the MPC.

So the chancellor has hit on a sensible balance - but a balance which is only defensible if the momentum for public spending and public investment can be sustained and accelerated beyond a general election which yesterday's package should have helped to guarantee that Labour will win. Mr Brown's dream of a country where people get what they want from public services and where poverty is squeezed out of the system is going to demand more, much more, of the same. Yesterday, in that sense, was just a down payment.